Richard Harrington: I absolutely agree with my hon. Friend; member engagement and involvement sounds very good—it is a laudable objective—but I have been around for nearly 60 years, of which I was in business for nearly 30, and I do not feel qualified to assess an investment strategy. I say that not to insult the vast majority of people, but because, although independent financial advisers and accountants may be able to do that, it is almost impossible for an individual to do so. We have to look at a way of ensuring that the investment strategy is the correct one for the majority of members, and that the regulatory system, the supervisory system and so on are in place. Hon. Members mentioned NEST, which already has more than 4 million members and 230 employers. This idea is very interesting but not at all practical.
I remind hon. Members that trustees play a key role in managing assets. They have overall accountability for the investment strategy. They have a legal duty; the hon. Members for Stockton North and for Ross, Skye and Lochaber—I can just about manage to say that now—used the expression “fiduciary duty,” and the trustees have a fiduciary duty to the members.
Laudable as new clause 2 is, pensions legislation already includes requirements for investment decisions to be transparent and in the best interests of members. The Government fully recognise the possible impact of investment decisions on members’ retirement outcomes. Even without the new clause, the Bill will add to those requirements. Clause 12(4)(d) already sets out that regulations made by the Secretary of State
“may include provision about…processes relating to transactions and investment decisions”,
while clause 12(2) states:
“In deciding whether it is satisfied that the systems and processes used in running the scheme are sufficient…the Pensions Regulator must take into account any matters specified in regulations”.
The new amendment would duplicate the provisions for master trust schemes that already exist under the Occupational Pension Schemes (Investment) Regulations 2005. The regulations require trustees of all schemes with 100 or more members to set out a statement of investment principles for their scheme. That statement must be made available to members on request and
“must cover…their policies in relation to…the kinds of investments to be held…the balance between different kinds of investments…risks, including the ways in which risks are to be measured”
and other key issues. The trustees must ensure
“that the statement of investment principles…is reviewed at least every three years…and without delay after any significant change in investment policy.”
Most people who are automatically enrolled into pension schemes are likely to remain in their scheme’s default fund and will not actively engage themselves in the governance of the scheme. That is why legislation makes requirements about governance and oversight of these matters, and why most schemes, including master trust schemes, need to provide a default strategy that covers similar areas.
Finally, multi-employer schemes have a legal duty under the Occupational Pension Schemes (Scheme Administration) Regulations 1996 to make arrangements to encourage members of the scheme or their representatives to report their views on matters that relate to the scheme, including areas about which the new clause proposes that the trustees should consult scheme members.

Richard Harrington: Again, I find myself having to disagree, not with the hon. Gentleman’s intention, but that this is a practical solution to what he wants to achieve. The new clause would require the trustees of an authorised master trust—it would not be there if it was not authorised—to hold an annual meeting open to all members, even if they cannot attend in person. It is clear what the hon. Gentleman wants.
As I have said—I know it is a bit of standard response, but I reiterate it—we are doing everything in the Bill to encourage member engagement and communication, especially now that the pension freedoms have been implemented. People must have the ability to assess their choice, and part of that is communication with what goes on. As we know, the Bill works alongside the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 and the Financial Conduct Authority rules that set out minimum standards for communication. Those ensure that members have access to appropriate information to make decisions about their pension saving, including an annual benefit statement and, for most people, a statutory money purchase illustration, which gives members a projection of their pension in retirement.
Documents relating to the governance of a scheme, such as the trustees’ annual report, the chair’s statement and the statement of investment principles, have to be provided on request. In addition, the Government have committed to ensuring that the pensions industry builds and launches a pensions dashboard, which is very important and would allow members to see their pension rights with different providers across the pension landscape.
Schemes are also developing their own methods of communicating with members. The hon. Gentleman has mentioned Legal & General several times and I endorse what he said, with the caveat that it is not the only company that communicates with its members. I have seen a big television campaign at the moment that shows people how to assess Aviva, and I have seen Standard Life’s app. Technology has really helped that kind of engagement. Regarding the new clause, I question whether an annual general meeting is the right way to improve matters. We have already established, for example, that NEST has millions of members from 230 employers—and will have a lot more in future. The hon. Gentleman also mentioned Legal & General’s members’ forum. Many firms have such a body. NEST has a members’ panel; the name is different, but it is effectively the same thing—a forum for scheme members to give their views on the scheme to trustees. NOW: Pensions, which is one of several competitors to NEST, is embracing digital communication and has a mobile-enabled website, which I have seen.
Some employers, such as Kingfisher and Tesco, are using mobile apps and games to interest members in their scheme. Those are far more interesting than an invitation to an annual general meeting, which apart from the impracticality of organising it for millions of people, is quite dull, I am sure, compared with the modern and user-friendly way of finding out what is going on. In addition to that, the Pensions Regulator provides detailed guidance for trustees about the standards it expects schemes’ communications strategies to meet  to ensure that they communicate transparently with their members. The details of that are on the regulator’s website and are quite extensive.
I sympathise with the drive for member engagement and accept that the hon. Gentleman has not tried to turn this debate into a goodie and baddie thing, implying that he is in favour of member engagement and we are not. I think we all agree on the objective; it is a question of how to achieve it. I do not believe that making AGMs mandatory is the answer. Some schemes may want to do that, and that is perfectly acceptable, but complex and expensive logistics will need to be thought out. I agree that some may do it and may use technology very well. It may be that future generations will be able to tap their app and get such a meeting or institution—I do not mean an institution as in a pension fund; I mean the institution of such a meeting. I do not have the technological jargon. That sort of thing would have seemed impossible to do on a screen 10 years ago that we now can.
I want to avoid the situation that the hon. Gentleman wants in which a scheme is obliged to hold an AGM, because the cost will be passed on to the membership and I cannot see that it will achieve the noble objective that the hon. Gentleman wants. I hope the points I have made sufficiently explain why the Government are of the view that the new clause is not appropriate, and I sincerely urge the hon. Gentleman to withdraw it.